Fisher Brothers Sells 605 Third Ave Stake To David Werner

Fisher Brothers struck a deal with New York City’s flip king at its 605 Third Avenue.

David Werner bought the 49 percent stake in the 43-story, 1 million-square-foot office tower, The Real Deal has learned.

Newmark’s Adam Spies, Joshua King and Adam Doneger were the brokers.

The news comes as Fisher pulled its Israeli bond market offering plan, TRD confirmed. The New York-based firm withdrew its Israeli bond market offering after it failed to raise enough interest from Israeli investors, according to a person familiar with the plans.

“Rising global interest rates and well-publicized challenges involving unrelated issuers caused unexpected changes in market conditions causing Fisher Brothers to delay its public offering,” a spokesperson for Fisher Brothers said in a statement. “We continue to remain open to pursuing a bond offering in the future should market conditions and our financing needs align.”

Fisher was seeking to raise about $100 million on the Israeli bond market as unsecured bonds, and planned to use a portion of the proceeds to purchase JPMorgan Asset Management’s 49 percent stake in 605 Third Avenue, TRD reported in July. JPMorgan previously listed its 49 percent interest in the building, seeking a valuation of $425 million.

If the bond offering was successful, Fisher would’ve only paid about $11.5 million for JPMorgan’s interest, which sits below the senior mortgage. The developer ultimately closed on the stake earlier this month for an undisclosed amount.

In a statement on its pullback, the developer also teased a deal, saying it was “looking forward to announcing a new investment partner for its 49 percent interest in the coming months.”

Werner has made his name in Manhattan development as one of the biggest buyers of discounted office buildings in recent years. He holds ownership stakes in a spate of Midtown properties like the 870,000-square-foot One Dag Hammarskjöld Plaza, which he closed on in June for about half of its 2019 sale price. He’s also the leaseholder for the larger of the two buildings that comprise the conversion of the Pfizer building, the city’s largest office-to-residential property.

Fisher also sought to use the proceeds of the Israeli bond raise to pay for capital expenditures and leasing costs on its existing portfolio, and general working capital. The company is moving forward with its capital and leasing plans using other sources of capital.

A British Virgin Islands company tied to Fisher filed a prospectus on the Tel Aviv Stock Exchange on Aug. 13, detailing its offering to prospective investors.

The Israeli bond market is appealing to American developers because it offers lower rates than traditional financing stateside. But Israeli investors’ for U.S. real estate has changed after the recent collapse of Michael and David Shabsels’ Simad Holdings.

Simad, which owned 30 U.S. summer camps, announced in May that it would default on its bonds, and about $34 million of bond funds were diverted to companies controlled by the owners. Bondholders are expected to receive a full recovery.

Other American developers have also run into trouble in Israel. Kohan Properties CEO Mike Kohan was ousted as the CEO of the BVI company he created to raise money in Israel after the company discovered he used the money to buy personal properties and paydown loans. GFI Capital’s BVI company also informed bondholders this summer that it might miss its bond payments.

The Israeli bonds are publicly traded on the Tel Aviv Stock Exchange, requiring privately held real estate companies to disclose financials and quarterly reports, often for the first time.

Fisher disclosed it had $5.4 billion in assets, $220 million in net operating income, and $460 million in revenue at the end of last year in its initial filings with the Tel Aviv Stock Exchange.